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LIFE INSURANCE POLICIES BEING CANCELLED DUE TO AMERICAN SAMOA GOVERNMENT

Submitted by admin on Wed, 01/26/2000 - 00:00

PAYROLL PROBLEM

By Vaaimamao Poufa

PAGO PAGO, American Samoa (January 21, 2000 – Samoa News)---The insurance policies of the people affected by the American Samoa Government (ASG) Payroll Deduction crisis are at risk, and 400 ASG employees are now in "delinquent" status at the Bank of Hawaii (BOH) due to overdue payroll deductions.

Sunset Life has terminated 15 life insurance policies and American National has terminated 140 policies because of ASG's failure to transmit payroll deductions to the companies to cover their life insurance premiums.

Local insurance companies and the Bank of Hawaii were the latest to testify before the House of Representatives on the payroll deduction problems.

Representatives from Sunset Life, AFLAC, American National, and Grand Pacific Insurance were at a committee hearing to personally deliver the message that the government is eight pay periods behind.

On behalf of its employees, ASG owes about $200,000 to American National, $100,000 to Grand Pacific, $680,000 to Sunset Life, and $500,000 to the Bank of Hawaii.

Although the insurance companies usually give a 30-45 day grace period for late payments, ASG's actions mean employees are 90-120 days behind.

Many policies have been terminated and the representative from Pioneer Financial Services, agent for Sunset Life, said that it is going to be hard for those policies to be reinstated.

Before reinstating policies, the insurance company will ask the owner of the policy to get a new medical certification to verify their health. And if the medical report is not positive, the policy will remain terminated.

The insurance agents said this could cause some tragic situations, especially for the elderly and those making death claims, since they have been paying premiums for many years and might end up with nothing.

It is especially tragic because it was not the policyholder's fault their policy was terminated for non-payment, said the representative from Grand Pacific Insurance.

He claims that none of their delinquent policies have been terminated because they are aware of the financial situation the ASG and its employees are in, and they feel they will be paid some day.

The House committee advised the insurance companies not to be hard on the delinquent policyholders because it is not their fault.

The representative for BOH said that 400 ASG employees are now in "delinquent" status with the bank.

About 1,149 ASG employees have a portion of their salaries withheld on behalf of Bank of Hawaii.

The bank spokesperson said the bank is aware that the problem is not the fault of the employee and the bank is still willing to make loans to such people, but they encourage their customers not to sign up for payroll deductions.

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